It’s time to bring back income trusts, says Ian Russell, president and CEO of the Investment Industry Association of Canada (IIAC).
That is one of a series of regulatory and tax-policy reforms Russell says are needed to help bolster investment in the Canadian mining industry. Speaking at the Canadian mining industry’s signature event, the annual Prospectors and Developers Association of Canada (PDAC) convention today, Russell outlined a series of regulatory and policy measures that he says would help boost investment in mining, and venture firms generally.
“We need to encourage investors to take advantage of growth opportunities among small companies,” Russell said. “And that includes taking another look at income trusts.”
Russell said the federal government should consider allowing small companies to convert to income trusts, the vehicles that were outlawed by the Harper government in 2006 amid concerns that too many large firms were using them to avoid taxes, costing the government tax revenue and distorting the capital markets. Russell suggests that allowing income trusts for small firms would revitalize capital raising, at a small cost to government revenue.
Russell reiterated the IIAC’s call for the introduction of a tax-deferred capital gains rollover provision that would allow retail investors to defer their capital gains in a small Canadian company and reinvest the proceeds in another one.
On the regulatory front, Russell called on policymakers to: move more quickly on reform ideas; periodically review new rules with an eye to eliminating unintended consequences; and push on with the effort to create a national regulator.
“A national cooperative regulator — bringing together 13 provincial securities regulators — would eliminate inefficiencies and overlap,” Russell said. “Small companies, including many in the mining industry, would be among the leading beneficiaries of a national cooperative regulator.”
Russell stressed that fiscal discipline is necessary to create a welcoming environment for investment. To that end, he called on the provincial governments to reduce their deficits and debts in order to bolster investor confidence. And he recommended building mechanisms to “better align the economic benefits of large projects with competing social and economic interests.”
“Canadian miners can find the wealth in the ground,” Russell said. “Canada’s investment dealers can come up with the capital to help them do it. We look forward to promoting policies that ensure Canada’s mining industry has a bright future.”